Court freezes assets in diamond fraud case

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Court freezes assets in diamond fraud case

By Susan Thea Posnock

July 24, 2007

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New York—A state judge issued an injunction Monday that freezes all assets of the defendants who were accused of stealing $3.3 million in diamonds as part of an alleged "bust-out" scheme to defraud 45 diamond companies.

Alfred Avi Taub, A Taub Diamonds Corp., Shalom S. Taub, Ora Taub, Oran Taub, Oran Designs and Shiran Atias are "restrained from transferring any and all assets, either personal assets or corporate assets," according to court papers filed in the Supreme Court of the State of New York in Manhattan as part of a civil suit filed by the diamond companies.

The restraint also covers joint assets and says all income to the defendants will be received by a court-appointed receiver, Paul R. Sklar, who will manage their assets. A temporary restraining order had been in effect since July 2 against all the defendants except Atias.

The civil suit, filed by attorney Cindy Molloy, who is representing 45 diamond companies, but says her firm is aware of at least 91 alleged victims, was filed on June 28.

It alleges that Alfred Avi Taub established A Taub Diamonds Corp., a diamond wholesale business in New York's diamond district, in April 2006, and together with his father, Shalom S. Taub, rapidly established credit and contacts within the diamond industry by initially paying the bills on small transactions over a period of 11 months, and using clients as references for one another, court papers said.

But this April and May, the suit alleges, the company had built up its credit enough to "bust out," and Alfred and Shalom Taub, as well as Atias, a company "affiliate" proceeded to collect more than $3.3 million in diamonds on memo, which the suit alleges the three men never returned or paid for. In addition, A Taub Diamonds Corp. did not have enough money in its bank account to cover the diamonds it had taken on memo, according to the suit, and began bouncing checks written out to the lawsuit's plaintiffs.

The lawsuit states the defendants also lied to their plaintiffs regarding the whereabouts of the diamonds on memo, with Alfred Avi Taub claiming that some had been converted into sales. In mid-June, he also told several of the plaintiffs that he'd been robbed and lost $1 million in diamonds, but that he had insurance to cover the loss, court papers said.

According to court papers, Alfred Avi Taub left the United States for Israel on the same day the suit against he and the others was filed, but returned on July 18 and has since been staying at the home shared by his parents and brother in Long Beach, N.Y. In a June 27, 2007 search of the premises, eight diamonds were confiscated by the New York Police Department, court papers stated.

In a deposition filed to the court on July 19, Taub invoked his rights under the Fifth Amendment of the United States. But according to court papers, he appeared on July 17 in the Magistrate Court in Kfar Saba, Israel, in which he said he was robbed of a little more than a million in diamonds, that $1.4 million was taken from him by a client who tendered the amount in several checks, the first of which wasn't honored. He told the court that about $500,000 dollars is left, and that he's still owed about $300,000, according to court papers.

While the Manhattan district attorney's office confirmed to The New York Times that it had been pursuing a criminal investigation into Taub's business, and that his homes in Long Beach, N.Y., and Brooklyn, N.Y., were searched, no arrests have been made in the case.

Neither the district attorney's office nor the defendants immediately returned phone messages.

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